Business Value of IS & Managing Change Causes of IS success and failure

n Laudon & Laudon Chapter 11 n Recognize that systems are developed in the first place
because of:
n ‘Software Runaways: Lessons learned from
n powerful external environment &
massive software project failures’ – Robert L
n powerful internal forces
Glass
n Organizations with similar environments and institutional
features, one succeeds and the other fails in the same IS
innovation.
n Why?

n Different patterns of implementation

n e.g. Ralliwolf and Rallis India

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What is system failure? Problem areas of IS

UI; Incompatible with
n “An information system: Stability,
structure, culture &
efficiency,
n that does not perform as expected timeliness goals

n is not operational at a specified time

n that cannot be used the way it was

intended”
n Usually accompanied by multiple,
parallel manual procedures Proportionality Consistency
with business accuracy,
value composition

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Thailand’s tax computerization project

Thailand’s tax computerization project - technology
n Prime contractor IBM Thailand n 3 layer client-server architecture
n Comprehensive tax system for: n repository management & reference data layer (2
n personal income tax, withholding tax,corporate large mainframes)
income tax, VAT
n Business process layer (56 Unix servers)
n tax payer demographic data, revenue consolidation,
etc. n tax payer interaction layer (860 intelligent terminal
clients)
n Data volumes:
n Over 10 million tax payers
n Oracle 7 DBMS distributed databases + Oracle
4GL development environment
n 120,000 transactions per day
n 900 database tables n TCP/IP & X25 communication over dedicated and
telephone lines
n Estimates: cost US$ 26 million, time 18 months
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Thailand’s tax computerization project
- outcome
n Runaway and scrapped after nearly 3 years and
after spending much more than the initial
estimate
n Reasons for failure (Technical):
n poor quality of communication infra structure did not
facilitate distributed database architecture, as a
consequence response time and preservation of
transaction integrity posed major problems
n real time response requirements to many transactions
were later found to be unwarranted
n architecture and choice of software(database & GUI)
were not the result of a proof of concept
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Thailand’s tax computerization project
- outcome
n Reasons for failure (technical):
n though the project was a strong candidate for BPR,
the processes were implemented as they existed
n Analysis & design teams had little knowledge of Thai
and the actual users no knowledge of English,
technical reviews were carried out in this
environment, resulting in unusually large number of
changes to base line specifications
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Thailand’s tax computerization project Causes of implementation success or

- outcome failure
n Reasons for failure (management): Users often take a narrow &
n development & implementation of all modules were limited view of the problem, they
tend to overlook innovation
concurrently scheduled
n American & European project directors & project
managers guided a heterogeneous team (200+) of Creating stake all round
designers and developers from Australia, India and
SE Asia and all these were on contract from multitude
of companies Project size, structure &
n Due to the long duration of the project a high turnover technology
of contractors’ employees caused further delays and
budget overshoots
Ignorance, optimism, change
management
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What can go wrong? What can go wrong?

n Analysis n Development, testing & implementation
n Poor definition n lack of planning in team formation
n vague objectives
n lack of proper standards, tools,documentation
n inadequate planning
n wrong estimation
n lack of standards
n absence of re-usable components
n improper staffing
n insufficient training
n absence of risk identification & mitigation
n lack of comprehensive test plan & execution
n Design
n unplanned data conversion
n improper fit
n untested technology
n lack of impact analysis & change management
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 Business value of information
‘Runaway’ reasons systems
n Common problem: the unreasonable Some financial models:
estimate of the cost & schedule of n Payback method:
construction n Years =(investment / annual net cash inflow)
n Poor management technique n Return on investment
n ROI = ((benefit-cost-deprn.) / useful life)/ investment
n The very technology proposed as a solution
n Net Present value
tends to become cause for failure n PV = (payment*(1- (1+interest)-n) / interest)
n Misconceived to start with n NPV = Σ PV - investment

n Inability to meet performance criteria n Profitability index (Σ PV / investment)

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